Recently topping out at 1.0656, the USDCAD currency has fallen to trade above the 1.0250 support level.  But, will this barrier hold in the short term?

Technical indicators point to a relative no.

Currently trading at 1.0279, the Canadian dollar looks set for another leg higher against the US dollar.  But, penetration through the pair’s support level is needed before any speculation to the downside can be for sure.  Potential for this to happen has increased on indications from a handful of oscillators.  Stochastics is showing slightly overbought conditions – although the benchmark line has already moved to a reading of 36.33 – while Moving Average Convegence/Divergence (MACD) is forming the basis for a bearish divergence.

USDCAD 60-minute timeframe – Source:  FXAlliance Charts

The bearish divergence is increasingly important as it is working with the pair’s current consolidation above the 1.0250 support barrier.

So, should the 1.0250 level be broken to the downside, traders will be eyeing short term support at 1.0229 or the 50% fibonacci retracement level from the 0.9787-1.0656 bullish move as the USDCAD’s next stop.  Any upside potential for the pair, from the current trading price, would remain dependant on a breakout above the 1.0350 resistance barrier.  This level coincides with the USDCAD’s 100-hour moving average and would confirm a shift in direction for the pair.